Use the Following to Answer Questions

question 135

Multiple Choice

Use the following to answer questions:
Scenario: E-Books and Sports Tickets
Phillip has an income of $300 per month, which he uses to purchase two goods, e-books and sports tickets. Each e-book costs $10, and each ticket costs $15.
-(Scenario: E-Books and Sports Tickets) Read the scenario E-Books and Sports Tickets. Measure e-books on the horizontal axis and sports tickets on the vertical axis. Suppose the price of e-books decreases. Holding everything else constant, Phillip's budget line has become _____, and his optimal consumption bundle will be on a _____ indifference curve.

• A) flatter; higher
• B) steeper; lower
• C) flatter; lower
• D) steeper; higher

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Definitions:

Disjoint Events

Two events that cannot happen at the same time, meaning they have no outcomes in common.

Conditional Probability

The likelihood of an event or outcome occurring, given that another event has already occurred.

Given Event

An occurrence or outcome within a probability space that has a specified probability attached to it.

Independent Events

Two or more events whose outcomes do not affect each other, meaning the occurrence of one event does not change the probability of the other.